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How creditor’s listings affect credit report and score

By Janet Lacey
Published: Saturday, December 26th, 2009

The Fair Credit Reporting Act or FCRA has mandated creditors to get outsourced help from collection agencies in dealing with debts. This mandate has made collection agencies go to the limits just to collect amounts of payment from indebted individuals. Adding up to this mandate, if a credit account holder will have a collection agency record in his or her credit and payment history it is more probable that his or her credit report and FICO score will be greatly affected. Any record of having a collection agency related payment will automatically imply bad payment habits which will lower credit worthiness ratings.

Nowadays borrowers who are entering settlement disputes are becoming more and more common. The pressing budget constraints pushed many people to enter into agreements that reorganize payments schedules and amount that needs to be paid with their creditors. At situations where the borrower was left with no other choice except to settle his or her debt with a collection agency, he or she must immediately contact his or her original creditor. Contacting the original creditor will give the borrower a good chance that a listing of settled will be reflected in the credit report of the borrower. A settled listing is better than a collection agency record.

As a plan of their debt management collection scheme there are collection agencies that would refuse to contact the borrower’s original creditors. The borrower should still contact his or her creditor, but in the event that he or she is unable to do so the best option is for him or her to directly pay the debt to his or her original creditor. In doing so, the borrower is reducing the probability that a collection agency record will appear in his or her credit history record which makes credit reports and FICO scores dramatically worsen.

Creditors will most probably accept the settlement offers that their borrowers would push for. Borrowers in the other hand should be persistent enough to make their creditors accept the offer and patient enough to wait for the decision. However, if the borrower is on a time constraint and cannot wait for his or her creditor to make a good listing of his or her debt the borrower can opt to push for better listings such as “Paid” and “Settled”. Better listings such as these will surely make the credit report and FICO score of the borrower much better.

Unfortunately, there are cases where the creditor is tough enough to refuse giving better listings to its delinquently paying borrowers. When this happens, most creditors will list the payment history record of their borrowers as 30 days, 60 days, 90 days and 120+ days late. This is the first choice for most creditors and this is the last resort of all borrowers.

Getting a late payment record will push the borrower to immediately pay all of his or her debt is he or she wants a better credit report and score. Most of creditors that lists their borrowers as such made this move to make their borrowers pay in exchange of the creditors’ efforts to delete these listings after the debts are fully paid.

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